AbbVie raises bid for drugmaker Shire to $51 billion

Video: AbbVie Raises Offer for Shire to $51.5B in 4th Bid

July 8 (Bloomberg) -- AbbVie Inc., the drugmaker split last year from Abbott Laboratories, made a fourth offer to buy Shire Plc, raising the price to about 30.1 billion pounds ($51.5 billion) in an effort to bring Shire to the negotiating table. Betty Liu

July 8 (Bloomberg) -- AbbVie Inc., the drugmaker split last year from Abbott Laboratories, made a fourth offer to buy Shire Plc, raising the price to about 30.1 billion pounds ($51.5 billion) in an effort to bring Shire to the negotiating table. Betty Liu

Peter FrostTribune staff reporter

AbbVie Inc. on Tuesday said it upped its takeover offer for Shire Plc by nearly 11 percent to more than $51 billion, remaining steadfast in its effort to sway the Irish drugmaker to agree to be bought.

The latest bid comes after North Chicago-based AbbVie's first three offers were rejected by Shire and its board, the latest of which was valued at about $46 billion. While short of "going hostile" -- an avenue AbbVie hasn’t ruled out -- the company said it spoke with shareholders who represent the majority of Shire shares before crafting its proposal and urged them to encourage Shire management to engage in discussions.

AbbVie shares fell more than 3 percent in morning trading to $55.67. Shire said that AbbVie did not present it with the revised proposal before the announcement. In a statement posted to its website, the Boston-managed, London-listed company said it would consider the bid while urging shareholders to take no action.

AbbVie on June 25 laid out its strategic rationale for pursuing Shire, which would both allow it to lower its tax bill by moving its domicle to Britain, a maneuver known as inversion, and diversify its drug portfolio. Shire, which has a cache of drugs that treat hyperactivity disorder and rare diseases, would augment AbbVie's line of treatments, which is heavily dependent on the world's largest selling drug, the multipurpose injectable Humira.

In its proposal, AbbVie said it planned to create a new U.S.-listed holding company but change its domicile to Britain. Shire, based in Dublin, is publicly traded in Britain.

AbbVie Chief Executive Richard Gonzalez said in a statement that AbbVie's latest offering "creates immediate and long-term value to shareholders to both companies," and he urged shareholders to "strongly encourage the Shire board to engage in constructive dialogue with AbbVie."

Under British takeover rules, AbbVie has until July 18 to make a firm offer for Shire. If it does not, AbbVie is not allowed to submit another unsolicited offer for at least six months, a so-called “cooling-off period.”

AbbVie’s offer is the latest in a spate of pharma industry tie-ups, fueled by a rush of American companies seeking to take advantage of a tax loophole that allows them to book corporate taxes at lower rates overseas in countries like Ireland, Switzerland and Britain.

In Illinois, Horizon Pharma Inc. said in March that it would move its headquarters to Ireland as part of a merger. Horizon chief executive Tim Walbert said the move would cause the company's tax rate to drop into the low-20 percent range or less, down from the high-30 percent range as a stand-alone entity in the U.S.

Deerfield-based Walgreen Co. also is considering a move to re-domicile in Europe after it completes its expected takeover of Swiss-based Alliance Boots GmbH, largely to take advantage of lower taxes.

Shire specializes in medicines for attention deficit hyperactivity disorder (ADHD), which account for around 40 percent of its sales. The firm also sells drugs to treat rare genetic disorders and is building up a portfolio of treatments in ophthalmology and other specialty disease areas.

The addition of Shire would diversify AbbVie’s portfolio and allow it to deploy its roughly $10 billion in cash, a majority of which is held outside the U.S., Jami Rubin, a Goldman Sachs analyst, wrote in a recent note to clients.